The U.S. dollar index has lost some of its recent gains after gaining 1.6% last week.
Gold prices rose more than 1% on Monday after plunging last week as recent gains in the U.S. dollar stalled. Traders are currently awaiting comment from: federal reserve system It asked officials this week for further insight into the trajectory of U.S. interest rates.
Gold prices showed a notable recovery in the UAE, with 24 carat gold increasing by Dh3 to Dh313.75 and 22 carat gold increasing by Dh2.75 to Dh290.50. Meanwhile, 21-carat gold rose 2.75 dirhams to 281.25 dirhams, and 18-carat gold rose 2.25 dirhams to 241 dirhams.
Spot gold worldwide rose 0.71% to $2,582.41 an ounce as of 6:11 GMT, after suffering its worst week of decline in more than three years on Friday. Gold prices rose nearly 30% last year, reaching a record high of $2,790.15 in late October. Meanwhile, US gold futures rose 0.73% to $2,588.85.
dollar rally stall
The U.S. dollar index lost some of its recent gains after gaining 1.6% last week. A weaker dollar makes bullion cheaper for buyers who hold other currencies. However, gold prices remained below $2,600 on expectations that the Fed's aggressive rate cutting cycle would ease.
Gold prices suffered their biggest weekly decline since September 2023, falling to a two-month low last week as the US dollar recently strengthened to its highest in more than a year. However, geopolitical developments over the weekend also encouraged inflows into some havens, helping the precious metal gain strong positive momentum. Last weekend, Russia launched its first large-scale airstrike on Ukraine in nearly three months, causing extensive damage to Ukraine's power infrastructure.
The pace of interest rate cuts is slowing
At least seven U.S. central bank officials are scheduled to speak this week. Strong U.S. economic and inflation data continue to reshape Fed policymakers' expectations about the pace and scope of rate cuts. The move comes after investors last week further dialed back expectations for a rate cut in December.
Friday's data showed U.S. retail sales rose slightly more than expected in October, underscoring the economy's resilience. Higher interest rates make holding non-yielding assets like gold less attractive.
Traders are currently pricing in a 65.3% chance that the Fed will cut interest rates by 25 basis points next month, down from 83% last week, according to the CME FedWatch tool.
Inflation concerns persist
Moreover, investors now seem convinced that President-elect Donald Trump's tariff plans and debt-financed tax cuts could accelerate inflation and delay the Federal Reserve's rate-cutting cycle. Fed Chairman Jerome Powell said last Thursday that with a resilient economy, strong job market and inflation still slightly above the 2% target, there was no need to rush to cut rates.
Meanwhile, Boston Fed President Susan Collins said in an interview that while another rate cut in December is being considered, it is not a “done deal” and there is no preset path for monetary policy. Separately, Chicago Fed President Austan Goolsby said that as long as the central bank continues to move toward its 2% inflation target, interest rates will likely be significantly lower than they are now.
Read: Oil prices soar as conflict between Ukraine and Russia intensifies, as concerns over demand in China persist
Other precious metals
With the recovery in gold prices, the precious metals market also showed positive movements. Spot silver rose 1.22% to $30.58, platinum rose 1.14% to $949.28 and palladium rose 1.71% to $967.05.
